Thus far, 2020 hasn’t been kind to Coffee Bulls – Coffee Futures hit their 2020 high on 01/02 and then proceeded to trade down to an all-time low in mid-June. Even with such a bearish backdrop, we find ourselves with a sentiment setup that could lead to a sharp countertrend rally over the next few weeks.

Last Friday, sentiment on Coffee Futures closed at 22% Bulls, which was up +7% Bulls from the previous trading session. Since 2006, Coffee Futures closed between 16-28% Bulls after gaining between +6-8% Bulls the previous trading session only nine other times. Of those nine instances, five of them resulted in multi-week rallies which reached an average gain of 13.4%. While the winning percentage of this set of trades isn’t overly impressive, the low risk/reward ratio makes it a compelling setup – one that we are going to take.

Here’s how we’re going to trade this bullish setup:

  • Place a GTC Buy Limit order for $KC_F (Sept) at 100.50
  • Once that order is filled:
    • Place a GTC Stop Loss order for $KC_F (Sept) at 98.25
    • Place a half size GTC Sell Limit order for $KC_F (Sept) at 108.50 (first Profit Target)
  • Once first Profit Target is hit:
    • Place GTC Stop Loss order one tick below the lowest price of the past three trading sessions and continue to modify that order as the position plays out
KC Sentiment 2020 07 19

**Update: 7/22/20:

Great call here by Sentrade as Coffee hit our target today of 108.50. High for the day was 108.75. Closing out 1/2 of our position, leaving trailing stop remaining.

KC Sentiment 2020 07 22 2

**Update: 7/30/20:

Coffee continues to rip through our target of 108.50, closing the day at 115.50 bringing our profit to almost 15% in only eight trading days since our call on 7/19. We continue to move our trailing stop up for additional profits.

KC Sentiment 2020 07 30

**Update: 8/05/20:

We’re seeing sentiment shift too quickly today as Coffee continues to rip higher. We’re closing our final long position here at $125.65 for a significant profit of 25.02%

KC Sentiment 2020 08 05

CONVICTION. EXECUTION. DISCIPLINE.

 

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